Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Sir Jim Ratcliffe’s purchase of a $1.3bn stake in Manchester United is set to be announced on Sunday after overcoming concerns about the future treatment of minority shareholders, according to three people with direct knowledge of the deal.
The agreement comes after a board meeting to end weeks of delays to football’s highest-profile transaction and will value the club at around $6.3bn including debt, one of the people said. It is the latest in a record series of sports deals, including private equity tycoon Josh Harris’s $6bn acquisition of the Washington Commanders NFL franchise.
The British chemicals billionaire and the Glazer family that owns the English Premier League club had agreed on the broad terms to buy a non-controlling stake in November, but a formal announcement has been repeatedly pushed back.
One of the obstacles had been how United’s public shareholders would be treated in any future transactions between Ratcliffe and the Glazers, according to people familiar with the matter.
Late changes were made to the structure or the bid to address concerns held by certain members of Manchester United’s 12-person board, one of the people said. They had sought assurances about potential future deals and whether they would allow the Glazers to cash out on terms that would not be extended to other shareholders.
There is no guaranteed path to control but Ratcliffe could increase his shareholding over time, the person added. The deal is subject to approval by authorities including the Premier League.
United and Ineos declined to comment.
The situation had been complicated because United has two classes of stock. The New York-traded A shares have inferior voting rights to the B shares held exclusively by the Glazers.
UK fund manager Lindsell Train, Ricky Sandler’s Eminence Capital and Chicago-based Ariel Investments are among the biggest holders of the A shares, which are largely held by non-family shareholders. Hedge fund billionaire Leon Cooperman has also accumulated a stake. Sandler has previously threatened to oppose any deal that treats minority shareholders differently from the Glazers.
Ratcliffe and his Ineos group are set to acquire around 25 per cent of the Glazers’ super-voting B shares and 25 per cent of the New York-traded A shares. Each B share has 10 times the voting rights of a single A share.
Ordinarily the B shares would convert into A shares on sale by the Glazers. The deal is set to recommend that shareholders tender their shares and approve legal changes that permit the transfer of B shares without conversion, one of the people said.
The British tycoon had previously reformulated the Ineos bid because of concerns that arose when his original proposal for majority control envisaged buying out only the Glazer family’s B shares without extending an offer to A shareholders. Ineos subsequently changed the proposal to buy 25 per cent of each share class.
The six Glazer siblings own 110mn B shares. Selling 25 per cent of the total at $33 would generate more than $900mn for the family. The deal would value United’s equity at roughly $5.4bn.
The New York-listed club’s stock exchange filings warn that the “concentration of voting power in our Class B shares may harm the value of our Class A ordinary shares” by “delaying, deferring or preventing a change in control”, “impeding a merger, consolidation, takeover or other business combination”, or “causing us to enter into transactions or agreements that are not in the best interests of all shareholders”.
Ineos’s proposal values United at about $33 a share. The A shares closed at less than $20 each on Friday. Ratcliffe is also set to inject $300mn of fresh capital into the club and take significant influence over football operations.
The Manchester United share price hit a high of more than $27 in February on expectations that the club would be bought in full by Sheikh Jassim Bin Hamad Al Thani, the son of one of Qatar’s richest men. However, his Nine Two Foundation withdrew from the bidding in October.
Read the full article here
